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AGENDA INFORMATION SHEET
<br />PROJECT: Approval of a Compromise, Settlement, and Release Agreement and accompanying amendments
<br />to gas and electric utility franchise agreements in resolution of that litigation styled City of Denton, Texas, et
<br />al. v. Texas Utilities Company, et al.
<br />BACKGROUND: By adoption of Resolution No. 2000-140 on October 9, 2000, City Council authorized
<br />intervention along with other cities in a consolidated lawsuit styled City of Denton, Texas, et al. v. Texas
<br />Utilities Company and Lone Star Gas Company, et al. to litigate the issue of delinquent franchise fees. As
<br />a consequence of that litigation, a proposed settlement agreement has been reached by the attorneys
<br />representing the consolidated cities and is now being presented to the individual cities for approval. That
<br />approval process consists of approving, by resolution, a Compromise, Settlement, and Release Agreement with
<br />the utility companies, accompanied by approval of amendments to the existing gas and electric utility franchise
<br />agreements.
<br />DESCRIPTION: As a consequence of the litigation, the City of Paris will receive $93,208.00 as its share of
<br />TXU's agreed settlement amount, which in turn will be apportioned appropriately over a period of time to
<br />ratepayers customarily assessed franchise fees. In addition, the City will receive another $36,668.00 as the
<br />City's share of a further payment in lieu of recovery of delinquent franchise fees, this portion of which will not
<br />be assessed against ratepayers. Finally, the City will recover $14,651.42, the City's share of a further
<br />settlement sum to reimburse attorneys' fees and costs incurred in the litigation. In sum, when all documents
<br />are finally completed, the City will receive $129,876.00, plus reimbursement of any out-of-pocket attorneys'
<br />fees and costs which the City may have incurred. In addition, certain changes in the existing franchise
<br />agreements have also been agreed to. With regard to the City current electric franchise, the proposed change
<br />should have no substantive impact, since the City already receives the maximum four percent (4%) franchise
<br />fee customarily assessed. The same is generally true with regard to the gas franchise agreement in terms of
<br />the actual four percent (4%) franchise fee, but the definition of "gross revenues" has been expanded in the
<br />amendment to the gas franchise to include other revenues not included before, which should in turn result in
<br />the City of Paris receiving some modest increase in franchise fees over the long term.
<br />In order to initiate the process of approval of this settlement, City Council must approve the resolution
<br />authorizing the Compromise, Settlement, and Release Agreement and approve, at the August 12, 2002,
<br />meeting, the two franchise agreement amendments on first reading. Because of the City's Charter provisions
<br />on franchises, final approval of the franchise amendments cannot be completed until City Council's October
<br />14, 2002, regular Council meeting.
<br />RECOMMENDED ACTION: Consider for approval a resolution authorizing the Compromise, Settlement,
<br />and Release Agreement and franchise amendments to the electric and gas franchise agreements on first reading.
<br />STAFF CONTACT: Larry W. Schenk, City Attorney, and Lisa Wright, Legal Assistant
<br />COST: There should be no cost to the City of Paris in approving this proposed settlement.
<br />SCHEDULE: Consider approval of the Compromise, Settlement, and Release Agreement and the two
<br />franchise amendments on first reading at City Council's regular meeting of August 12, 2002. Subsequent
<br />approval ofthe franchise amendments will be required on second reading at City Council's September 9, 2002,
<br />regular meeting, and on third and final reading at City Council's October 14, 2002, regular Council meeting.
<br />COUNCII, DATE: Consider for approval at City Council's August 12, 2002, Council meeting.
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